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Charity (Tzedakah): The History of Jewish Philanthropy in America

by Evan Mendelson

The American Jewish communal enterprise is a unique blending of Jewish religious traditions and the democratic pluralistic traditions of the United States. Out of biblical injunctions to protect the poor, orphans, widows and strangers, a vast institutional infrastructure, supported by voluntary philanthropy, has developed. It has helped shape, and been shaped by, the uniquely American nonprofit sector — a phenomenon which often astonished foreign observers like Alexis de Tocqueville. He was fascinated by the large number of voluntary organizations that existed in the 1830's. This “third sector” continues to be unequaled in the world in its size and scope. The yearly budget of the American nonprofit sector exceeds the budgets of all but seven nations in the world, and nonprofits employ more civilians than the federal and state governments combined.

The American Jewish philanthropic tradition has a parallel history. From Torah and Maimonides through the establishment of the institution of the charitable trust in 1601 in England (companion legislation to the Elizabethan Poor Law), the American Jewish way of giving is influenced by a strong religious imperative for individualized tzedakah and by the development of modern American legal mechanisms that encourage private philanthropy.

The modern foundation is a recent invention, created at the beginning of the twentieth century by the great industrialists “for the good of mankind.” Foundations “professionalized” the practice of charity, bringing modern notions of management, efficiency and scientific thought to the enterprise of ameliorating human problems. As John Gardner, founder of Independent Sector, described it, “Wealth is not new. Neither is charity. But the idea of using private wealth imaginatively, constructively, and systematically to attack the fundamental problems of mankind is new.”

American Jews developed a unique model of philanthropy, which has greatly influenced the general community's philanthropic structure as well. The Jewish cultural tradition of “taking care of one's own” shaped the giving mechanisms and institutions created to address immigrant needs at the turn of the century. Individual support for synagogues and welfare agencies grew into a Jewish federated philanthropy of pooled individual contributions that supports a defined institutional infrastructure. Begun in 1895 with the Boston Federation, the federation movement has grown to 178 federated communities.

Few independent Jewish foundations existed before the 1970's. But as American Jewish wealth grew, opportunities for philanthropy in the general community increased, and interest in “hands on” giving developed, the number of Jewish foundations grew. Jewish foundations of substantial size began to form. In the last decade there has been an explosion. Dr. Gary Tobin, of Brandeis University's Institute for Community and Religion, estimates that there are 7,000 Jewish foundations, with assets totaling $10-15 billion. Some are private foundations without family connections to the original donor but with some mandate of Jewish giving. Most of these are family foundations where either the founder or his/her descendants control the funding process.

Funder Rather Than Foundation

The term “foundation” may be misleading. As a legal term it refers to a specific set of privileges and responsibilities as defined in the tax and corporation laws of the country and the states. The Foundation Center, a nonprofit organization that collects information on foundations, defines several different kinds of foundations, some within the legal definition and some considered “public charities” by the IRS. The private foundation is what we think of when we use the term “foundation”. But many of the “family foundations” are actually donor-advised funds or supporting foundations of a public charity, such as a community foundation or a federation. Federations are actually grant-making public charities, or what is commonly called public foundations, which raise the funds that they allocate annually from a large number of donors. This new, growing phenomenon of independent foundations is, therefore, quite diverse and relates more to the attitude of the giver, than the structural form it takes.

Today's Jewish Funder

Of the 39,000 private foundations in the United States identified by the Foundation Center (1994 information), two-thirds are managed by families. While individually they tend to be small (assets under $5 million), as a group they hold assets worth more than $86 billion and make grants totaling over $5 billion. According to a study by Dr. Gary Tobin of Brandeis University, only 24% of Jewish family foundations give away more than $250,000 per year. Sixty-four percent give $50,000 to $250,000 per year. However, these figures probably are not an accurate reflection of the total giving of the philanthropists, because many of them give individually as well as through their foundations. The most recent philanthropic model is the growing number of independent donor-advised funds and supporting foundations associated with Jewish Federations. The estimates are that they total well over $3 billion and are the fastest growing philanthropic mechanism today. According to Dr. Tobin, “While billions of dollars have flowed into foundations over the past few years, it is but a trickle of what is expected to take place over the next decade.”

An enormous transfer of wealth is expected in this country during the next several decades. Eight to ten trillion dollars will be passed down from Americans over the age of 50 to their children and their grandchildren, creating the largest transfer of wealth in the nation's history. This windfall from the WWII generation that scraped and saved to build businesses, and acquire stocks, bonds, and real estate will transform 5 million average Americans into millionaires.

Particular vs. Universal Philanthropy

A majority of American Jews support both Jewish and general causes. Even the largest and most well known “Jewish foundations” fund within the general community as well. Some older, more established foundations have focused on general community funding through the foundation, and dispersed their Jewish philanthropy through a lump sum given to the local Federation, and/or discretionary contributions by the individual family members. This model is changing, however, as a growing number of foundations are beginning to evaluate their Jewish funding in the same way they assess their general funding—as a program area with focused funding priorities.

In this milieu, private Jewish foundations are emerging as one of the most critical elements in the changing face of Jewish communal life in America. Foundations provide a catalyst for change by funding new and creative approaches to old problems. They can promote inter-organizational collaboration and non-bureaucratic structures to address the growing complexity of human needs. Collaboration among several funders can focus attention and provide the necessary funds to see a project through to its conclusion. Working to expand the impact of local Jewish Federations, foundations can complement the allocation process, providing the experimentation that can lead to institutionalized change.

Independent Jewish philanthropy (whether through private foundations, donor-advised funds or supporting foundations) represents a uniquely American form of the philanthropic imperative. As a new century dawns, its impact will be felt both in the Jewish community and American society.

Sources: Jewish Funders Network